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Justified price of the mortgage


During the period of intensive growth of “bubble” on the market of real-estate, the Bank has faced the problem of adequate assessment of price for mortgage security and balanced management of own risks in case of credits provision for construction or mortgage. The exit from developed situation seemed to be in carrying out of a study on assessment of the adequate market price of residential and commercial real-estate.

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Direct survey of real-estate market member could not provide objective data for assessment of the situation. Monitoring of prices stated in real-estate purchase/sale advertisements also were not corresponding to real prices used in real life. IGM has designed special multi-factor model of market behavior and has obtained an adequate picture of current state of the market.


IGM consultants have made great preparatory work. There were performed broad consultancies with market players, experts in the sphere of real-estate and construction, as well as analysis of worldwide tendencies and experience of the real-estatemarket, and all of those means allowed IGM to discover key factors of influence, which later become the basis of the multi-factormodel.

There was a separate study performed for each factor – starting with the priceof territory purchased with the purpose of construction and connection of utility lines, all the way to the price and volumes of a secondary offering on the market. Specialists have analyzed historical data along with gathering operative information by means of field studies.

Each factor has undergone separate analysis, then the forecast of behavior for this factor was made for the nearest 5 years. Finally, all factors were summarized using the mathematical model, which helped in calculating the offset limits for the lowest and highest prices on real-estate objects of different categories. As the result, an adequate assessment of justified market prices was obtained.


Conclusions of studies, performed by IGM, have become the basis of the development strategy for a Bank, and assessment of loans as well as perspectives of credits provision for projects in the sphere of mortgage and construction in particular. At the moment of worldwide real-estate crisis in 2008, results of performed studies were confirmed and the Bank has managed to avoid direct losses of more than 100 millions USD and kept the reputation mostly due to a timely corrected policy of risks management.
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